China’s disappointing economic growth that came in at 7.7 percent in the first quarter, when the market was expecting an expansion of 8 percent, is leading to a loss of confidence in the outlook for the world’s second largest economy.
“Slowing first quarter 2013 GDP [gross domestic product] growth despite massive credit expansion, much of it off balance sheet, spells bad, bad news for the Chinese economy,” Patrick Chovanec, chief strategist at Silvercrest Asset Management tweeted following the release of the data.
When “exploding” credit growth is met by slower economic growth, this equates to a “dead end,” he added on Twitter.
Despite stabilization in the global economy, support from the government’s $157 billion infrastructure stimulus package unveiled in the second half of 2012 and strong credit issuance, China’s economy has failed to live up to expectations in the first three months of the year, said experts.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.